Front-running is an investing strategy that anticipates the impact of upcoming trades on the price of a security and uses such information to influence the price of the security. In front-running, a trader will take a position in a security just before another trader takes a position that will cause the stock to move in a predictable way. An example of front-running occurs when an individual trader buys shares of a stock just before a large institutional order for the stock, causing a rapid increase in the stock's price. Information regarding the institutional order can be obtained by monitoring the bids and asks on the market. For example, when an order is only partially filled on one exchange, a trader's intent for the trades on the other exchanges can be revealed, allowing other investors to use such information to make a profit based on the predictable effect of a certain transaction on the price of a stock.
The present technology overcomes this and other limitations of existing trading systems and provides other benefits as will become clearer to those skilled in the art from the following description.